Chief Executive Officer
Here’s how you can avoid major chaos for your FBA business in this year’s Q1 by taking a real look at the Amazon supply chain situation in China and getting you
2023 is upon us and FBA sellers are preparing to continue to ride the wave that is Amazon. The ecommerce giant is still one of the biggest global profits for buying products online and showing no signs of stopping. In fact, it’s estimated that the total sales on Amazon grew by nearly 20% in 2022.
However, there are a couple of components that Amazon FBA sellers need to consider when it comes to how this year and especially this Q1 will play out. Most notably, one major setback that could gravely impact your business's success in these first few months of 2023 is any Amazon supply chain issues in the context of China.
This may sound like we're back in 2020, but remember the term "flatten the curve"? In China's case, the curve was pushed nearly back a couple of years into Q4 2022 and Q1 2023 (possibly even into Q2). With the major holiday of Lunar New Year approaching this January 22 -- and the common break factories have for 1-2 weeks around this date -- will either help mitigate or accelerate any supply chain problems for Amazon FBA sellers around the world, depending on how things play out over the next month or so.
Want to find out more about sourcing your FBA inventory? Here’s why moving your product sourcing from China is the right move for 2023.
According to the latest reports, it does appear that China is moving away from its ongoing zero-Covid policy and allowing for more movement in and out of the country. But while the nation recently opened its borders by dropping the quarantine rule for foreigners, Covid cases are on the rise and the country is seeing a major wave of infections, which is something that was pretty much kept at bay in 2020, 2021, and even 2022. This means that factories across the country may risk being shut down entirely.
At the beginning of the pandemic in China, international borders were closed but factories were open, which resulted in major delays in the supply chain and headaches for countless Amazon FBA sellers. But what happens if borders are open but the factories are not? This is a big problem if you’re sourcing products for Amazon FBA from China.
Furthermore, there’s the chance that domestic travel will be halted as millions of Chinese factory workers plan to return to work after visiting their hometowns for the Lunar New Year break, as this recent Forbes article predicts. This means that there won’t be workers in the factories, whether they are open or not.
Given all of these factors, it’s safe to say that we will see at least some delays in getting your products, not to mention shipping from China to the Amazon FBA warehouse - but to what degree? We just don’t know yet.
If you want to take control of sourcing your FBA inventory, you can start to take action now. We suggest that Amazon sellers who source their inventory from China to reorder ASAP from their supplier. This will help to avoid any potential inventory stockouts for your business in the first few months of this year.
On the other side of the equation are the current macroeconomic conditions, with many financial experts pointing to a likelihood of a recession happening in the U.S. and around the globe. So as a business owner, you need to consider how such a significant potential event could impact your Amazon business in the coming year and beyond.
Recessions tend to bring a slew of impacts on our everyday lives, and most certainly, in our spending habits. In a recession, it’s not unlikely that people will be looking to reduce their spending on unnecessary products (or basically, anything non-essential) as consumers keep a tighter eye on their budgets.
Taking this into consideration (which you should), Amazon FBA sellers may not want to order too many units for their inventory. You don’t want your Amazon FBA or whichever third-party warehouse you use to be overloaded and end up paying extra in storage fees, given a possible slowdown in sales for 2023.
What is an Amazon seller to do in this situation of conflicting approaches. For starters, reviewing the seller data from previous years is one important way to learn from the past so that you can cultivate a sustainable business moving forward. Speaking from experience, we at Mayan suggest that you go through some important questions and concerns, such as:
As an FBA registered seller on Amazon, gaining insights from previous sales performances will help you optimize your inventory levels to prevent being under or overstocked.
At Mayan we have tools available to make the process easier for sellers like yourself. Firstly, our dashboards are there to help you keep track of your products’ inventory levels. In addition, we use inventory signals to assist you in optimizing your advertising campaigns on Amazon. This is one of our differentiators from other data experts like us in the business, and we’ve built it so our clients can efficiently and sustainably grow their Amazon sales.
Lastly, we are delighted to announce that we will soon be launching a data-driven inventory management product to help properly forecast your inventory needs for your Amazon business! Stay tuned and subscribe to our newsletter so you’ll stay in the know on our latest products and resources built with the needs of the Amazon FBA seller in mind. Despite the cloudy outlook that the start of 2023 has brought, we remain confident that ecommerce sales will continue to grow on Amazon this year like they did in 2022. And as an FBA seller, will you be a part of that? We at Mayan wish all ecommerce sellers a successful 2023.